We now enter the peak of the retail season and the wind down for many small and medium enterprises.
We have to thank Glenn for giving us a break and the labour market for continuing to create thousands of part time jobs.
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Consumer confidence rising
Consumer confidence is again on the rise, at 117.4 points. This is a very significant 6.2 points than last year. Australians are more confident about Australia’s economy over the next twelve months with 32% (up 2%) of Australians expecting ‘good times’ economically, compared to 28% (down 3%) that expect ‘bad times’.
Michele Levine from Morgan Research says that more than half of Australian households (56%) say now is a ‘good time to buy’ major household items and only 15% (down 4%) of Australians say now is a ‘bad time to buy’ major household items
Now 33% (up 1%) of Australians say their family is ‘better off’ financially compared to a year ago while 29% (down 4%) say their family is ‘worse off’ financially. We are more positive about our personal finances over the next 12 months with 39% saying they expect their family to be ‘better off’ financially while just 18% (up 2%) expect to be ‘worse off’ financially.
UK Business Confidence for the final quarter of this year is also on the rise.
Year on year, the proportion of businesses that are more confident about prospects for the coming year compared to the past 12 months is up to 34%, compared to 27% last year. At the same time, pessimism has decreased: Approximately 26% are less confident about their prospects for the coming year, down from 40% in the same quarter a year ago.
In the US Business Confidence is still taking a battering from fears of a two-year recession caused by the failure to avert the “fiscal cliff”. Even then, the odds are in favour of a deal being done before Christmas. Polls indicate that 56% think Obama and the Democrats will make a good faith effort on the fiscal cliff, while just 43% think Republicans will. The WaPo-ABC poll showed twice as many people would blame the GOP as blame Democrats if the fiscal cliff is breached.
European confidence is also showing moderate signs of recovery. While EU sentiment improved across all sectors, except for construction (where it remained unchanged), the eurozone registered increases in industry and retail trade, which were partly offset by decreases among consumers, in construction, and a virtually unchanged level in services.
The situation back home
Back home in Australia, official global forecasts indicate growth is likely to slow next year.
In the midyear economic and fiscal outlook (MYEFO) published last week, the Treasury confirms ”all the risks are firmly on the downside”. Unemployment has dropped to an official 5.2 % using ABS figures and the Morgan Poll shows the overall level to be slightly higher but not out of control.
In the light of all the “good news”, smart companies have to be much more active in reaching out to current consumers and aggressively working to create new customers.
Now is definitively the time to build up the volume and not the time to cut either prices or consumer expectations. The next three months will be the best for growth before all Australian governments cut government spending and concessions as part of the general post GFC austerity drive.
As Ken Davidson says: “From a macro-economic perspective (the impact on spending in the rest of the economy) the main justification for the cuts is that they would ‘’make room’’ for higher priority spending, including the Gonski education reforms, the National Disability Insurance Scheme and a means-tested dental scheme.”
Ken warns that obsessive debate about the budget deficit misses the point. In the current economic climate the risks in achieving a 3% growth rate and keeping unemployment from rising above 5.5% are both on the downside.
Smart companies must make hay while the sun shines. To get to a near-to-balanced budget in 2012-13 (a $1.5 billion surplus, equal to 0.1% of GDP), the government has to cut $45.5 billion out of the income-expenditure stream compared to 2011-13.
Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.